Thursday 13 December 2018

People don't want 'jam tomorrow', they deserve jam today

A Minister of Finance needs to be generous in the good times to make the financial struggles of the bad times feel worth it

'Prudence is Paschal's middle name.' Photo: Gareth Chaney/Collins
'Prudence is Paschal's middle name.' Photo: Gareth Chaney/Collins

Eilis O'Hanlon

It could be that Paschal Donohoe is simply teasing everybody, and that, when he gets to his feet in the Dail on Tuesday, he will unveil a Budget so chock-full of enticing goodies that it makes every previous Minister of Finance look like Ebenezer Scrooge by comparison.

Don't bank on it, though. Prudence is Paschal's middle name. The chances of him splashing out next week are slimmer than a Kardashian sister's waistline.

As for surprises, they seem to be a thing of the past. Budget speeches these days are flagged up well in advance. That's why the parameters of Budget 2019 are pretty much set in stone at this stage.

There'll be a little bit help for people struggling with prescription charges. A €300 rise to the Home Carer's tax credit. The Christmas bonus will be fully restored for pensioners and welfare recipients.

There's also to be a cut in the Universal Social Charge, once dubbed "Ireland's most hated tax" after it was imposed on all workers in the wake of the financial crash. It was supposed to be temporary, to dig the country out of a hole, but then income tax was supposed to be temporary too when it was introduced to Great Britain by Pitt the Younger to pay for the Napoleonic Wars, and - spoiler alert - that turned out not to be true either.

Didn't former Finance Minister Michael Noonan pledge to be rid of USC altogether by 2021, or was that just a dream?

According to the number crunchers, who can tot up these things quicker than a TD working out his expenses, the proposed changes to USC will mean that somebody earning €50,000 will be around €230 better off next year. To put it another way, it's the equivalent of just under four and a half euro a week, or 60¢ a day.

Is that it? Seriously? After years of penny-pinching, and meekly doing what they were told, taking the pain because that's what the economic gods demanded as penance for the crash, they're to be rewarded with the cost of a pint?

One pint. Each week. Don't guzzle it down too quickly, folks, it might go straight to your heads.

After all, "we all partied". Isn't that what our beloved leaders said? It wouldn't do to repeat the mistakes of the past. But that fiver does feel awfully like a patronising gesture, like being sent to the shops by your mum to buy bread and being told you can keep the change, only to discover it's not enough to even buy a packet of Love Hearts.

In fact, it's worse than that, because the money that's being spent is people's own, yet they're still expected to be grateful when they get some loose change back after the bulk of it has been spent.

Expecting more from Minister Donohoe was probably foolish. He's a cautious man. He may well be content for his legacy to be as the first Minister of Finance since 2007 to be deliver a balanced Budget. That's not an altogether ignoble ambition. Few ministers in any department are able to say that they left the country no worse off than it was before they took office. Usually quite the opposite.

Half an eye may also be on Brexit, whose consequences remain as mysterious as the outer edges of the galaxy. Perhaps next year, if all goes well, he'll loosen those purse strings a little. Or, if that's asking too much, the year after that.

But "jam tomorrow" is a miserable philosophy to offer people who've endured the worst recession in recorded history.

Not one of the worst. The worst. Ever. And it's still not beyond the realms of possibility that another financial crash might strike. Many of those who warned about the last one have similar concerns now. The faults in the economic system which led to disaster a decade ago are far from fixed. The sticking plasters that were applied hastily to the cracks could easily loosen. But if a Minister for Finance can't even show some munificence when things are going well, when can he?

The experts tut-tutted when President Trump announced his support for tax cuts, but now the American economy is booming, with productivity soaring, unemployment at its lowest level since 1969, and wages rising. Prospects in the US are so bright that those financial markets we're all supposed to worship like cavemen huddled round a standing stone have even started to wonder if there's such a thing as "too much good news".

Far be it from anyone to suggest that plenty of those who've had to tighten their belts for a decade on this side of the Atlantic would be more than willing to take that risk.

Even in Tory Britain, Prime Minister Theresa May told her party's conference last week that "austerity is over", confidently declaring: "The British people need to know that the end is in sight."

British people don't know the half of it. When it comes to making sacrifices over the past 10 years, the Irish people were practically World Cup champions while everyone else was still playing five-a-side Sunday football.

Ireland has now had the fastest growing economy in the EU for four years in a row, and the reward is apparently the cost of a pint.

At least for most workers. TDs were reported last week to be enjoying a €935 pre-Budget pay boost as the latest public sector pay rise brought their annual earnings up to a healthy €94,535. That's a 1pc rise this year. Next year it will be 1.75pc, and the year after that 2pc. No jam tomorrow for them. It's jam today, with a side serving of marmalade, and why not help yourself to some pancakes while you're at it? Sure, it's all free.

Wait, did someone say public sector pay rise? So that's where most of the €3.4bn which the Government had set aside for so-called "new spending" has gone. Some might say that public sector pay rises look very much like old spending, the very same extravagance which, lest we forget, also contributed to the crash.

Still, at least someone's feeling the benefit of better times. Fine Gael insulted voters at the last election with that 'Keep The Recovery Going' slogan, but it doesn't appear to have learned the lesson. It's not enough to wave the books around and tell people the recovery is in full swing. They also need to feel it in their day-to-day lives.

The Budget is a once-a-year opportunity to fire up that feel-good factor. Paschal won't get another chance till next October. It seems a shame to waste it by forgetting that people have a right to expect more of their own money back when things are going well, because god knows, they see little enough of it when they're going badly.

Sunday Independent

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